AIIB may consider lower-carbon infrastructure projects, raising concerns

By Chen Qingqing in Jeju Source:Global Times Published: 2017/6/17 17:57:53

Concerns were raised after the Asian Infrastructure Investment Bank (AIIB)'s energy strategy, unveiled Friday, did not rule out funding coal-based infrastructure projects, though it said it is committed to both the Paris Agreement and UN Sustainable Development Goals (SDGs).

The board-approved energy strategy is the result of the cooperation of many parties, of "many stakeholders, after rounds of discussion and consultations, and this is the best we can achieve," AIIB president Jin Liqun told the Global Times during the press conference at the AIIB 2nd annual meeting of the board of governors in Jeju, South Korea. 

The bank is sticking to two principles -- implementing the Paris Agreement and working with member countries with their own contributions, he noted. 

The energy strategy is based on existing international agreements, Joachim Von Amsberg, AIIB vice president for policy and strategy, told the Global Times. Under the Paris Agreement, each country faces its own path and challenges to achieving a lower-carbon economy, he noted. 

"AIIB's role is to have each country to go down that path," he said. 

Jin said there are no coal projects in the bank's pipeline, and the bank will not consider any proposals that might have an environmental impact or damages the bank's reputation.  

However, the bank's energy strategy, which was unveiled on Friday, states that it aims to reduce the use of carbon for energy by limiting coal investments, as to lower investments in natural gas as well. 

In some countries, the use of natural gas will be a very important part of their lower-carbon energy transition, Amsberg said, noting that the bank will continue to invest in that in the meantime. 

"We're looking country by country. We'll assess each proposal and determine if it's compatible with the Paris target," he said.

The AIIB can play an important role in accelerating the clean energy revolution in Asia, and what is significant is that it now recognizes the opportunity to contribute to both sustainable development and the implementation of the Paris climate change agreement, Ben Caldecott, director of the sustainable of finance program at the University of Oxford, told the Global Times on Friday. 

However, it would be wrong for the AIIB to continue supporting new coal investments, he added. "These face significant stranded asset risks, harm human health by contributing to air pollution, and lock in expensive fossil fuel infrastructure longer than necessary," the expert said. 

Non-governmental organizations (NGOs) welcomed the bank's commitment to help countries meet the SDGs and implement the Paris Climate Agreement through the funding of sustainable projects, such as renewable energy. 

"One challenge that remains is that the energy strategy does not rule out coal lending. This could potentially undermine meeting the global goals. But Jin confirmed that there are no coal projects in the pipeline and that the AIIB won't finance coal if it damages the environment or the bank's reputation. 

"That gives us hope," Oxfam policy adviser Kiri Hanks told the Global Times on Friday. 

The NGO proposed that funds be withheld for new coal plants or a lifetime extension of existing plants, Hanks said.

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